Monthly Archives: March 2009

Google Launches Local Maps Domain for Kenya

On March 31, 2009, Google launched the local domain for Google Maps in Kenya, – an interactive map with many features and business listings.

Some Features: 

  • Users can add locations to their own my maps (Local celebrities have contributed (Wangari Mathai, Churchill, and Julie Gichuru)
  • Content can be added to maps by individuals such as photos of a place, restaurant reviews, hotel information (no. of rooms, visa card accepted) and Wikipedia entries.
  • Photos that have coordinates can be over-laid.
  • Business owners can add their business locations and details.
  • Collaborate users can share information and invite/select others to contribute on parties, events, add maps and event-related information.
  • Privacy information can be designated as private or public (search engine accessible).
  • Local websites can embed google maps by simply by adding some code.
  • Mobile phone same features for Kenya also accessible via Google Maps for Mobile – like search, driving directions, show traffic, favorites, and “my location”.
  • Mapmaker: Tool can be enhanced with google mapmaker.

All these are Free

Other Mapping Events

  • March 31 Skunkworks Tuesday at KCCT Teleposta Towers 4th Floor, from 5.45 pm. A talk by Dennis Karanja, Regional Director EA Sybase, a mobile phone application development company.
  • More developer workshops being held today @Google.
  • Google will also sponsor Where Camp Africa on Saturday April 4.

Kenya Bank Rankings 2008

Top 10 banks at December 2008

Assets
1. KCB (rank last year – 2) Kshs. 174.7 billion (~$2.19) billion
2 Barclays (1) 168.8b
3 Standard Chartered (3) 99.14b
4 Cooperative (5) 83.9b
5 CFC Stanbic (4) 83.2b
6 Equity (6) 77.2b
7 Commercial Bank of Africa (7) 50.1b
8 Citibank Kenya (8) 47.5b
9 NIC (10) 42.7b
10 National Bank of Kenya (9) 42.7b
Then Diamond Trust, Investment & Mortgages, Prime, Housing Finance, Imperial

Profits
1. Barclays Kshs 8.0 billion (~$100 million)
2. KCB 5.39b
3. Equity 4.76b
4 Standard Chartered 4.7b
5. Citibank Kenya 3.35b
Then Cooperative 3.33b, National Bank of Kenya 1.8b, Commercial Bank of Africa 1.7b, Investment & Mortgages 1.62b, NIC 1.47b

Deposits
1. Barclays Kshs. 126.4 billion (~$1.58 billion)
2. KCB 109.8b
3. Standard Chartered 76.9b
4. Cooperative 65.9b
5. CFC Stanbic 61.5b
Then Equity 50b, Commercial Bank of Africa 41.8b, NIC 35.2b, National Bank of Kenya 34.3b, Diamond Trust 32.7b

Loans
1. Barclays Kshs 108 billion (~$1.35 billion)
2. KCB 79.3b
3. Cooperative 53.3b
4. CFC Stanbic 44.2b
5. Standard Chartered 43.3b
Then Equity 40.9b, NIC 30b, Commercial Bank of Africa 26.3b, Investment & Mortgages 25.9b, Diamond Trust 25.4b
Source: from published audited accounts for 2008

Rea Vipingo 2009 AGM

Nairobi Stock Exchange-listed Rea Vipingo Plantations Limited, one of leading producers of sisal held, its 2009 annual general meeting on March 27 2009 at the Panafric Hotel, Nairobi.

The meeting started at 11 a.m. sharp with a short video shown about the company explaining more about its background and what it does. Created by an amalgamation of companies in 2003 that acquired more estates in Tanzania in 1995, it got listed on the NSE in 1996. Since it was listed, sales have grown from Kshs 537 million to Kshs 1.2 billion and production is now at 17,000 tons per annum.

The meeting led by company Chairman Oliver Fowler went straight into shareholder questions immediately after the video.

Professional shareholder Alois Chami stood to ask a question (he’s at every AGM and always asks a couple of inane questions – virtually all company chairmen & secretaries know him by name) – but his mobile phone went off and he had to sit and answer it. (about a half dozen phones go off at every meeting, and some shareholders magnify this discourtesy by answering the calls.)

How was the company’s performance was in 2009? The Chairman said it was quite good, maintained their markets, still getting good buys from China, while the weak shilling/strong $ has also helped them.

Impact of the global economic crisis? Performance still good as the company has good cash position, scaled back capital expenditure and made some cutbacks. Still, they can’t predict how the sisal industry will perform and are also nervous.

Competition from petrol twine versus their sisal twine: (the price of oil is 1/3 of what it was a year ago). Chairman said their primary competition, was not from synthetic twine, but from other sisal producers – as they were all competing for a diminishing pool of customers.

If company doing well, why reduce the dividend? (from Kshs 0.8 per share in 2007 to 0.2 in 2008) Chairman said at the time of the decision, they actually intended to pay no dividend since the outlook was so grim (and wanted to conserve cash), but since they got some contracts, decided to make a modest payment

Does low share cap hinder borrowing? No it does not, their borrowing is quite low considering the value of the company’s assets and which bankers look at more. Their facilities are up for renewal next month, but don’t expect any hitches.

How much are contingent liabilities? (no figure was indicated) The Chairman said they would be mostly for industrial claims covered by workmen compensation and there were no material claims of substance.

No logo/signature by directors & auditors in the published accounts: The Chairman assured shareholders that they had been signed and the auditors had signed and the accounts could be verified at their office or the company registry (Chami got his act together and asked this, he was later brushed aside by another shareholder when he kept hammering this trivial point)

Subsidiaries: Part of the profit came from fair value gain (a book profit, not actual profit) as well as from revaluation of biological assets

Does having a golf course add value to the company? The Chairman took a moment to correct a misunderstanding that is occasionally repeated in media – that the company Rea Vipingo is not the developing real estate or golf courses in Vipingo, Kilifi Kwale (Coast Province). It is being done by another company adjacent to the sisal estate – and while they were all part of the original sisal estate – the land that was not suited for sisal production (sandy beach) is being used by the other company.

What does the company do for CSR? The company engages in corporate social responsibility – staff are housed at sisal estates in Kenya and Tanzania and receive medical care while children are schooled in nursery and primary school on estate, with some getting scholarships to high school. They have in the past been involved in famine relief and distribution in Makueni district, but in 2009 the government had not requested their assistance

Dry season affect sisal? Sisal is drought resistant, but the prolonged dry season can affect production.

Bank borrowing: The Chairman was asked, but explained that they had taken some foreign loans, and one from a supplier (Wigglesworth) since they were at lower rates than bank loans.

Director elections: After 12 years of service, director Musa Sang retired from the company board during the year and he was replaced by Brown Ondego (Chairman of Rift Valley Railways, and former MD of Kenya Ports Authority). Shareholders confirmed his election, but also (again) asked to consider getting (i) female directors and (ii) younger directors (these will being new skills like ICT to the company which did not have a website till a few years ago)

Hot button moment Director allowances: in asking the shareholders to approve non-executive directors remuneration for 2009, the chairman mentioned that they will rise by 10% – from Kshs 30,000 per month to Kshs 33,000 per month (~$400). Some shareholders briefly protested that their dividend was being cut while directors get paid more and that the directors’ increase should also wait till the economy and company’s performance improved. The board poorly defended this matter, but it was passed without much interruption.

Special business: Shareholders approved the board decision to purchase an additional 330 hectares for sisal production from Vipingo Estates Limited (VEL)

Goodies: One shareholder stood and complained that the company had NEVER given shareholders a token item of appreciation, unlike other companies, and the chairman said they would once, performance improves. Tea and snacks were served outside by the pool, but it was a mad scramble that left many unhappy as the bitings were finished by the early grabber

Networking: Had a nice chat with Coldtusker and Ryan Shen Hoover while this was going on

Equity Bank 2009 AGM

Equity Bank 2009 AGM (it’s 5th) was held at the Kenyatta International Conference Centre on Thursday March 26. This capped another year of spectacular performance by the bank during an otherwise difficult 2008 US$1 = Kshs 80

Start on time? Last Equity forum was 45 min late: this one was scheduled to start at 10 a.m. and was late by about the same delay. Last time we were entertained by an entire Boney M album, this time it was a series of advertisements for the bank, with a patriotic them recalling images of tourist splendor (majestic Mara), agricultural potential and athletic achievements (Kipchoge Keino, safari rally, safari sevens rugby) all ending with the line we are proud to be Kenyan

The main speakers of the day were Peter Munga (Chairman – Chair), James Mwangi CEO and Mary Wamae (Company Secretary)

The Chairman took up a long time by reading his entire written speech – almost 20 minutes. He handed over to the CEO who also ran down a series of financial highlights for the year including;

– Market capitalization rose in 2008 from 54 billion to 66 billion (only NSE company whose shares appreciated in 2008 – by 3%)
– Earning per share up from 6.9 to 10.6 – and dividend per share also up 50% from 2 to 3
– Cost to income ratio unchanged at 60%, and down from almost 80 four years ago
– Helios investment (sale of 25% for 11 billion) was the smartest thing the board did – gave the bank the capital & muscle to grow. With their 19 billion capital and subordinated debt of 6 billion gave the bank 27 billion of capital (most cap bank)
– Opened 35% branches, installed 150 ATM’s

Speech also took about 20 min as he added:

– All the awards the bank won in 2008 (Euro money, Africa Investor) which were on display for good measure
– The bank is a case study at Columbia, Harvard, Stanford, IESE and Lagos

The company’s secretary also read out the report of the directors never seen that happen

Fun stuff at AGM’s is always the Q&A with shareholders:

Bad blood in banking sector: one shareholder commended the bank for the fight-back in his area (Machakos) where rumors led to a run at the branch, and a team (with cash) visited to reassure residents that the bank was strong. The bad blood was attributed to competitors who are jealous of Equity’s bank success – CEO mentioned a proverb of a tress that grows taller than the forest canopy and then gets buffeted by winds from all directions. He said they can withstand such challenges because of (i) capital of almost 27 billion (ii) liquidity of almost 66% and (iii) good asset quality

Why borrow foreign funds? one shareholder asked why the bank borrowed. The lines provide long-term funds for long term lending 3-5 years). E.g. a German loan was to support investment in irrigation schemes, of which there are now 3. CEO assured the shareholders that the loans from (Dutch, French, and German institutions) were all denominated and would be repaid in Kenya shillings, cushioning the bank from exchange losses

Most generous company in Kenya: one shareholder asked why the company did not publicly participate in corporate social responsibility (CSR) programs? CEO said that Equity, unlike other companies, which gave a little money with a lot of publicity, was actually the biggest corporate spender in Kenya – bigger even than the Telco’s (Safaricom?, Zain?) and gave some examples
– when they opened 4 branches in Nyanza in 2008, they donated 20,000 beehives to women’s group’s as well as 10,000 avocado seedlings –avocado’s and honey were the most promising products of the region (i.e. beehive can generate 36,000 to 48,000 annually) .
– in Eastern province, they donated sorghum seeds to the residents of Ukambani – and will partner with East African breweries (EABL) to ensure that harvest from the residents will be bought by the beer giant.
– In the education sector, they sponsored 186 top-performing high school student by paying their university fees at a cost of 112 million shillings
– Fanikisha loans (to women groups) has become their flagship product with over 187,000 loans, and in agriculture disbursed 70,000 new loans in 2008
This kind of CSR that Equity engages in, is not publicity, but it is actually sustainable and transform lives by giving individuals the power to generate incomes

Regional diversification: Uganda was a takeover, Sudan is a greenfield and they will watch the growth to see which strategy is better for expansion to other African countries.
– Uganda starts operations at end of March with 30 branches (the biggest branch network in Uganda), and open another 20 this year – he said they had already increased profit by 100 in the second half of 2008 since they took over, even while doing a re-brand operation. CEO said Uganda had better growth prospects than Kenya which had a lot of negative politics
– Sudan starts in April
slip of the tongue? CEO at one point said … “…when we open in South Africa” while also mentioning looking at Rwanda and Tanzania as being next

Buy other Banks? one shareholder asked that they buy up more shares in housing finance, while another suggested they also buy up National Bank of Kenya in which the government is offloading more shares. CEO said they would do their due diligence on NBK and if they were announced as being in the running, shareholders would know soon, but if not, then there was something they did not like after their analysis of NBK (as far back as 2005, Equity have been interested in NBK). CEO mentioned that RBS of Scotland took over a bank before the economic crisis, and choked on that toxic investment that has reduced its value to a mere fraction (from $119 billion to $3 billion)

Enough bad loan provisions? these increased from 600 million to 1 billion, but was that enough one shareholder asked, considering that some of these were for Safaricom shares? CEO said they lent individual 80% for Safaricom shares with investors paying 20%, then the over-subscribed IPO allocated just 21% (which the investor paid or), and so the 1% loan was repaid in the first week

Poor bank network systems: one shareholder complained about the downtime of the bank’s IT systems – at branches or at ATM’s which perhaps led to people saying the bank was shaky. CEO said they have been upgrading the platform over the last few weeks and it has caused some hiccups but they would be over. Equity is now branchless, you can bank in Kenya, Uganda, and Sudan seamlessly. Also, look for new branches as queues and crowds will no longer be an issue

Kenya immune from global crisis? CEO said in the year 2000, Kenya economy shrunk by 2% while Equity grew by 100%
– The stock market dipped in 2008 as foreign investors (who constitute 70% of trading) left the NSE, but they are now coming back
– Said Kenyans were being scared. there are no toxic loans in the sector. If the Kenyan economy grew by 2.8% in 2008 and is expected to grow by 3.6% in 2009, and even though tourist numbers and exports will be affected, overall we should not unnecessarily panic about… except in the capital markets.

Argument against being a stock-broker: one shareholder asked why they did not buy a stockbroker like NIC (bought Solid stockbrokers) and yesterday Coop bank (bought into Bob Matthews stockbroker)? CEO said that not going to happen as stockbrokers have such bad reputations and toxic assets. Equity already has a custodial license, they already employ 8 stockbrokers, and get 70% of the transactional income – so why the need to become a broker? They get the profit now, without the hassle
– said as custodian, they are the largest custodial account holder with over 50% of all CDS accounts in Kenya
– he exhorted all shareholders to transfer their shares from their stockbrokers to Equity Bank.

Shareholder votes: 
– first and final dividend for the year of Kshs. 3 per ordinary share of Kshs. 5
– Election of directors: Ernest Nzovu was re-elected while Dr Ezekiel Alembi (of Kenyatta University) and Professor Shem Migot- Adholla (former GoK dream team PS) were elected as new directors. The Chairman mentioned that Peter Njeru Gachuba (Africap) and Linus Gitahi (CEO Nation Media Group) had retired to make way for the new directors.

Share split: 
can’t be selfish when doing well
– Special Business was the share split that every ordinary share be sub-divided into ten shares
– CEO explained that shares had become too expensive at the Nairobi Stock Exchange, which made it difficult for shareholders to judge their true values. E.g. to buy minimum 100 shares of equity costs 12,700 while to buy KCB costs 1,700 and co-op just 610 shillings
– company has 10,000 shareholders and 3.5 million customers. The share split will enable more customers to become shareholders
CEO gave a history of bonuses and splits:
i Year 2000: share split- 1 share sub-divided into 4
ii 2004 bonus – 5 bonus shares for each one held
iii 2007 bonus – 3 bonus shares for one held
iv 2009 split – 1 share split into 10
– so if you had one share in 2000 worth 20 shillings, that share was now worth 7,500
– the register closed yesterday (March 25) and the new shares start trading on May 25
– CEO exhorted shareholders to hold on to their shares, as they could be expected to go from the current 13 (130) to 34 (340 was the previous high before the bear market)

Odd moments: 
– Managers and board were asked stand and bow to the shareholders
– CEO was at one time referred to as chief servant
– CEO seemed to delight in the woes of Citiiank and the US banking sector
– The meeting started and closed with a positive prayer by Canon (priest) who obviously must be a shareholder too.

Goodies: Buffet snacks served outside by safari park catering staff tea/soda – with samosas, cake, fish fingers, croissants,

Summary: Nice AGM. Equity is now media savvy and the event was well attended and covered articulately by the press

Difficulties Changing Nairobi Stockbrokers

Stockbrokers are falling at the rate of almost two a year, and tales continue to abound.

The reality is that, sooner or later, you may need to change your broker and while I’ve had this post for over three years about how simples the process of transferring shares from one broker to another should be, the reality is very different!

Kenyan shareholders have had the option not having share certificates for a few years now. With a central depository system (CDS), you surrender your share certificates e.g 1,000 Kenya airways (KQ), and in exchange get an electronic account/statement which is updated each time you buy or sell, shares. You also get all your dividends and annual reports by mail.

Still to buy and sell shares you have to go through a stockbroker, who ideally should have the same tally as your CDS statement. Recently problems have been had with rogue brokers, who would sell share without informing clients – and clients would only find out when they got a CDS statement showing less shares than what the broker said they had. Later the frauds went even further when brokers would ensure that even CDS statements didn’t get up-to-date records of share sales.

I had to change broker for a company account this week and the reality was much more than. I had a team of people, the transfer was between two viable brokers and we were able to get all the (numerous) documents that were asked for. Yet it still involved almost a dozen trips to the office and took almost two weeks.

The steps taken included
(i)Open an new CDS account with new broker
(ii)Close old CDS account with old broker
(iii)Move shares from old to new CDS account

Documents that were asked for included
– 3 copies of Certificate of incorporation with – one stamped by old broker, one stamped by new broker, one for the CMA (all stamped by company seal)
– Memorandum & articles of association requested by new broker (was not required at old broker so copies had to be traced and photocopied)
– 3 copies of director ID or passports – stamped by old broker, stamped by new broker, one for to the CMA (all stamped by company seal)
-2 copies of form of shares being transferred one called CDS 4A and one called CDS 4B, signed by directors and stamped with company seal. One form must be stamped by old broker, one stamped by new broker
– 200 shillings ($2.50) transfer fee

Now imagine what it is like trying to reconcile accounts, reclaim investments or move from a collapsed stockbroker? Or a fraudulent one? Or one who doesn’t have motivated (paid) staff, or proper records?

Also until last year, IPO’ were considered sure winners – and people would open several accounts e.g. in the name of their mother, grandmother, cousin, maid, driver etc, all in a bid to get more shares after the fractional allocation that characterized Kengen and Safaricom IPO’s, but before the price rocketed up on day one. Many CDS accounts were opened, many by new temporarily hired staff in a bid to get as many applicants in as possible during the limited (IPO’s usually 2 -3 weeks) and some rules were readily relaxed. I explained these to the new broker, but they said CMA can come and audit their files and they have to comply CMA have their hands full with collapsing or non-compliant stocbrokers!

So, finally, the new account is now open, after a very tiring two weeks, during which I confessed that it was maybe better to sell all the shares held at old stockbroker and open a new account at new stockbroker than to attempt to transfer the shares.